How to ensure you pay the best price for power
After a series of rises, electricity bills are predicted to fall in many markets. Here’s what you need to do.
What is the DMO?
The 2019 mandatory Electricity Retail Code introduced the Default Market Offer (DMO), which caps the price that electricity retailers can charge consumers on default plans.
It also introduced the Reference Price, a benchmark that lets customers compare electricity plans using a single price.
Most retailers’ market offers are cheaper than the annual DMO price cap, so you should still shop around if possible to try to find a better deal.
Last year alone, power bills for many consumers jumped 25%, compounding inflation driven cost-of-living pressures.
However, for the first time in two years, electricity costs are expected to fall following forecasts from the Australian Energy Regulator (AER).
Residential and small business consumers in Queensland, New Soth Wales, Victoria, and South Australia could see a fall between 0.3 and 9.7%. Other consumers could face less-than-inflation rate increases of around 0.7%, depending on their region.
The AER’s price forecast, or draft determination as the regulator calls it, applies to Default Market Offers (DMO).
The DMO caps retail prices and helps consumer compare offers across the market.
National Seniors Australia fought hard for the DMO to bring fairness into what was a confusing retail market. This was a huge win for older consumers unable to shop around for a better deal on energy.
The national electricity network is not unified. So, under a separate draft DMO for Victorian customers released by that state’s Essential Services Commission, typical bills for residential customers will be cut by 6.4% and bills for small business customers by 7%.
Regulators in Tasmania and the Australian Capital Territory set their own offers, while in Western Australia the state government determines power prices.
The AER says the relief for customers comes because of a plunge in wholesale power prices since 2022. But network costs – about 40% of retail bills – have increased, limiting the falls in the DMO.
Network cost increases are being driven by inflation and interest rate rises plus less revenue due to milder weather conditions over the last year.
The AER says it makes its annual price forecast after guidance from federal ministers and balances the objectives of protecting customers from unjustifiably high prices, while allowing retailers a sufficient margin to enable them to recover costs, to compete, and to offer new products and innovations to the market.
According to the AER, retailers in some of the more competitive markets are below the DMO. So, it is best to contact your energy provider and ask for the best offer.
The regulator says the median market offer has dropped by between 1% and 5% across most electricity distribution zones since 31 December 2023 and the most competitive market offers are now 18%–23% below the DMO price.
Your retailer is required to tell you on the front page of your bill at least every 100 days if it can offer you a better deal.
You can visit the free and independent Energy Made Easy website to compare deals. Most retailers have cheaper deals on offer, so shopping around remains the best way to get the best price.
You should also ensure you are accessing all the available rebates and concessions to which they are entitled.
Bill relief is currently offered by the Commonwealth, Queensland, New South Wales, and South Australian Governments in DMO jurisdictions. Click here to identify which forms of assistance may apply to you.
If you’re struggling to pay your bills, contact your retailer as soon as possible. They are required under national energy laws to assist you.
